Denel tables flawed financial reports

4 October 2017

Today, in Parliament the Public Enterprises Committee was presented with a letter from the Auditor-General, Kimi Makwetu, in which he expressed concerns regarding the financial audit the firm, SNG, did of Denel.

The A-G found that SNG failed to properly account for irregular expenditure in its report of Denel’s financials.

SNG requested that Denel amend the flawed reports, but according to the A-G, Denel resisted this request and proceeded to table the incorrect financials.

It is completely unacceptable that a Board and the executives of a public entity would see it fit to not only submit incorrect financials but also deliberately refuse to follow an instruction by an auditing firm.

By doing so, Denel also possibly breached Section 55 of the Public Finance Management Act (PFMA), which states that “[t]he accounting authority for a public entity (a) must keep full and proper records of the financial affairs of the public entity [and that financial reports] fairly present the state of affairs of the public entity, its business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned”.

The DA will now write to the Chairperson of the Public Enterprises Committee, Ms Zukiswa Rantho, to request that Denel be urgently brought before the Committee to account for this transgression.

The DA shares the A-G’s concerns, considering that SNG has also done financial audits on Transnet and Eskom.

Given the fallout from the KPMG scandal and credibility concerns with the audit profession in general, we trust that the A-G needs will go over the audit outcomes of Eskom and Transnet with a fine tooth comb to check for similar errors.

Corruption is rife within our state-owned enterprises, and we need to ensure that auditors are transparent.

Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 4 October 2017